I bought both of them cash money and should be receiving the deed in February because it takes a while to process. 

I assume you are trying to maximize profits.....if selling to another STR investor they will underwrite the deal to make sure their numbers work.

Of course, putting more down like 30 % would make it look like the property cash flows well, but is it worth it to put that much down, or is 20 or 25% down better depending on which gives you a better interest rate?  

Plus, having an LLC in place from the start can streamline the process of acquiring and managing properties under a business entity.

Your own website from their templates, booking software, and payment processing.

Which I think also means I can sell the house at market rate once the foreclosure process clears?

Should I make changes in the org?

This makes Mezzanine Debt particularly suitable for self-directed IRAs as it avoids UBIT (Unrelated Business Income Tax) risk and offers easier tax reporting via 1099-INT.

I agree with wanting the first one to be a "win", I'm just concerned that makes it harder to find something that will cash flow.

So I would educate them on the fact that they were given a gift for many years, and now that you have finally chosen to raise rents to market (so that you can make the profit that you deserve) they will have to wait for a year so that you can put aside some of your new (and well deserved) rent increase to pay for their nrew floor.